Bally’s admits Bet.Works acquisition mistake as new CEO seeks third-party sports platform
New Bally’s CEO Robeson Reeves admitted the operator made costly mistakes in its North America strategy during his first presentation to investors and analysts.
Q4 2022 revenue increased by 5.3% year-on-year to $576.7m as adjusted EBITDA rose by 22.8% to $145.8m. Net loss spiralled to $487.5m, compared to $115.3m in Q4 2021.On a full-year 2022 basis, revenue came in at $2.26bn following an annual rise of 70.6% as adjusted EBITDA climbed by 66.3% to $548.5m. 2022 net losses reached $425.5m.
Reeves, who replaced Lee Fenton as CEO this month, admitted the acquired Bet.Works business did not give Bally’s the platform required to develop a competitive product in US online sports betting.
“We didn’t react fast enough and this will not happen again,” said Reeves on the Q4 earnings call. “We are confident there are more economical and nimble solutions out there and have spent the past five months analysing them deeply,” he added.
This means Bally’s is likely to partner up with a third-party supplier for sports betting and will listen to offers for the Bet.Works business and DFS offering Monkey Knife Fight.
On outsourcing the tech, Reeves said: “We are considering lease options, because we don’t think you need to own now. What’s great about that is that all costs are directly correlated with revenues, so we’re going to take a very smart approach.”
Reeves promised a streamlined focus on iCasino for the Interactive division, where the business can “play to its strengths”, while sports will be used primarily as an acquisition tool.
“We are fantastic at iCasino and everything you can see in our business shows that,” he added.
As a result, the operator has “completely reworked” its technology development pipeline.Reeves said: “With 1,000 plus developers, me and my team having a tight grip on priorities is how we’ll move faster to deliver near- and long-term results to investors.”
Bally’s CFO Bobby Lavan revealed the operator was having ongoing issues with filling jobs to support demand due to the “tight” labour market in the US.
Bally’s cut 15% of its North America Interactive workforce in January of this year.
In a follow-up question, an analyst filling in for Lance Vitanza from Cowen & Company asked whether wages were likely to increase for the remainder of the year as a result.
“There’s certainly going to be continued upward pressure on that,” admitted Lavan.
Best quoteIn a colourful Q&A session, Reeves was congratulated several times over on becoming the new chief executive of Bally’s Corporation. When pressed for what to expect from his leadership style, he offered the below:
“You should expect me to follow the data. I’ll be analytical in our approach to decision making to deliver customer centric, profitable solutions. I believe the most valuable asset to deploy is focus. I will focus on opportunities with scale and go after them harder.”
Current trading and outlook
Bally’s reaffirmed guidance for full-year 2023 with revenue in the range of $2.5bn to $2.6bn and adjusted EBITDAR in the range of $660m to $700m.
The operator is expected to deliver annual adjusted EBITDA losses of between $40m and $50m for its North America Interactive division in 2023 with the intention to reach profitability in 2024.